Don't yield to the curve

Study supports efficiency of state anti-predatory lawsMortgagePress.comAnti-predatory loan laws A study by the Center for Responsible Lending has indicated that laws against predatory lending obstruct abusive lenders, while increasing availability of credit to sub-prime borrowers, in many cases. During the study, titled "The Best Value in the Subprime Market: State Predatory Lending Reforms," researchers examined more than 6 million sub-prime mortgages from 1998-2004--three-quarters of all sub-prime loans originated during that period. States with the strongest laws--Massachusetts, New Jersey, New Mexico, New York, North Carolina and West Virginia--showed the largest declines in loans with predatory terms. Furthermore, predatory loans dropped by almost one-third in many of the 28 states with some kind of regulation against them. The study also found that these laws had no effect on the number of loans available and that borrowers in states with predatory lending regulations paid approximately equal or lower interest rates for sub-prime mortgages. Predatory mortgage lending costs Americans an additional $9 billion-plus a year, the Center for Responsible Lending estimates, primarily affecting low-income borrowers. For a copy of the study, visit www.responsiblelending.org/pdfs/rr010-state_effects-0206.pdf.